Stock futures slipped on Thursday after selling by banks in the market

Stock futures edged lower on Thursday night as investors looked to upcoming jobs data for clues about how the Federal Reserve might move next. The action follows a sharp selloff led by bank stocks.

Futures tied to the Dow Jones Industrial Average declined 99 points, or 0.3%. S&P 500 futures and Nasdaq 100 futures each shed 0.4%.

Wall Street posted a losing session on Thursday. The Nasdaq Composite declined 2.05%, while the S&P 500 declined 1.85%. The Dow declined 543.54 points, or 1.66%, as the 30-stock index closed below its 200-day moving average for the first time since November 9. All three indexes are on course to end the week at least 3% lower.

Financial stocks led the market decline in Thursday’s session, dragged down by a 60% drop in SVB Financial as it plans to raise more than $2 billion in capital to offset losses from bond sales declare.

The announcement triggered a sell-off in the financial sector as investor concerns grew that higher interest rates would result in banks facing losses on loans due to borrower defaults. The financial sector was the worst performer, with the S&P 500 down 4.1% – its worst day since 2020.

Wall Street is preparing for the February jobs report, which is to be released at 8:30am ET. Economists polled by Dow Jones expect non-farm payrolls to rise 225,000 in the month, marking a slowdown in growth from January’s unexpectedly large gain of 517,000.

According to Dow Jones, the unemployment rate is expected to remain unchanged from January – when it has not seen a low since 1969 – at 3.4%. Economists expect hourly wages to rise 0.4% last month, up from 4.8% 12 months ago.

According to Brad McMillan, chief investment officer at the Commonwealth Financial Network, while more jobs are considered good for the economy, a better-than-expected report could push stocks down. This is because more workers may indicate more demand, he said, which would indicate higher inflation.

Traders are pricing in about a 63% chance of a half percentage point hike in rates by the Federal Reserve at its next policy meeting in about two weeks, according to the CME Fedwatch tool. Investors view Friday’s jobs report as a key driver in that decision, which continues to be cited by the central bank as justification for rate hikes on the strength of the labor market.

“A strong report would be bad news for the Fed, for interest rates and for the markets,” McMillan said. “This is the problem we face tomorrow.”

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